Eastern European consulting industry grows 5% to €1.1 billion

07 November 2016 Consultancy.uk

Eastern Europe's consulting market has, despite a turbulent political environment, recorded solid growth last year, expanding 5% to reach a total value of €1.1 billion. Geopolitical tensions and mixed signals from governments and corporates means that the outlook for 2016 and beyond is uncertain, with low growth the most likely scenario for the region's consultants. 

According to data from Source Global Research (Source), an analyst firm that keeps track of market developments in the global management consulting industry, Poland was the fastest growing consulting market in the region, growing by 7.2% to €426 million. Both the Czech Republic (up 5.9% to €168 million), and Slovakia (up 5.6% to €75 million) also grew faster than the wider market. Romania, the region's second largest consultancy space, booked just 1.6% growth to €184 million, with Hungary also experiencing a tough year, growing 1.9% to €126 million.

Across the board, the region has seen solid growth since 2012, when the Eastern Europe consulting market was valued at €912 million. Growth rates of 7.6% and 5.3% saw the industry break through the barrier of €1 billion in 2014, while last year the total fee income of the largest consultancy firms in the region* was assessed to be worth €1.1 billion.

Size of the Eastern European Consulting Industry

Service line / Industry

Technology consulting is the biggest service line in Eastern Europe, growing 6.8% to €378 million, and it's also the fastest growing, partly thanks to work relating to digital initiatives. According to the authors, the region is seeing a good deal of demand for traditional IT work, with digitisation gaining momentum, although digital maturity still lags a good distance behind the world's largest economies. Over the next few years, emerging trends such as the Internet of Things (IoT) and Industry 4.0 are expected to become big forces. 

A view of consulting spending by industry reveals that all sectors enjoyed at least some growth in 2015, though some did better than others. Financial services (up 6.1% to €466 million) and retail (up 5.9% to €54 million) were particularly good sources of work thanks to digital disruption becoming an issue for clients in these areas. The majority of projects in the digital landscape were largely about customer experience.

In manufacturing – an industry which saw 6.8% growth to €122 million – a lot of the work was happening in Eastern Europe's vigorous automotive industry, where clients are particularly interested in operational improvement (shop floor excellence, supply chain optimisation) and Industry 4.0. HR & change management was also a hot topic for auto manufacturers, with strong interest in leadership development and cultural change.

Eastern European Consultancy Industry

Growing influence from the West

The report by Source further notes that a growing share of consulting assignments in Eastern Europe initiate in the West. "Whether that comes in the form of local projects directed by foreign headquarters or work for Western clients that's been "nearshored" to local consultants, assignments with roots outside the region have become bigger business over the last few years", write the analysts.

For 2016 and beyond the prospects look mixed. In terms of countries, most will do well, forecast the researchers; Poland is however set to face a challenging year, and given its enormous share of the market it risks dragging down the overall growth rate of the region. Eastern European consultants are also mixed in their view of client demand. The say they see a strong desire to pursue consulting engagements, yet at the same time they worry it could be a long time before clients have the discretionary funds to take action. 

In addition, the turbulent political environment is top of mind for many of the region's consultants, with many concerned that a wave of right-wing sentiment, the heating political ties with Russia and Euroscepticism will discourage foreign investment and put critical EU funds at risk.

With a market size of $55 billion the United States is the globe's largest management consulting industry. 

* Source's analysis looks at the revenues of consulting firms with more than 50 consultants.

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Accenture's push into the creative sector is an identity crisis

18 April 2019 Consultancy.uk

In its latest push into the creative sector, Accenture Interactive acquired New York and London-based ad agency Droga5 earlier this month, adding illustrious clients such as HBO, Amazon and The New York Times to its roster of clients. With the latest in a long line of similar purchases, Accenture Interactive further demonstrated its ambition of becoming the globe’s leading trusted advisor to chief marketing officers. Yet according to Ben Langdon, Chairman of Class35, Accenture’s strategy may be heading in the wrong direction.

A press release on Accenture’s website announcing the acquisition sits next to a quote stating that “brands aren’t built through advertising” – a huge contradiction from a consultancy firm hell-bent on becoming the ‘CMO agency of choice’. It’s not alone of course. The entire consulting industry wants a piece of the creative pie right now. In addition to Accenture Interactive, recent acquisitions by PwC Digital, IBM iX, and Deloitte Digital meant that in 2017, for the first time ever, four of the world’s ten largest creative agencies were consultancies.

So just what it is that Accenture wants to achieve from this? For one thing, it’s clearly trying to be a digital transformation business. A one-stop creative shop rivalling more traditional models, it wants to lure CMOs in with the promise of lower ad spend and a “more impactful customer experience”. At the same time, though, it’s still in thrall to those same slinky, shiny branding and advertising agencies it’s attempting to disrupt. The Droga5 acquisition and that of Karmarama a few years before are both testament to this.

There’s a fundamental problem with this, though. Digital transformation businesses don’t sell to CMOs. These people have enough on their plates trying to transform their own marketing skills in order to keep up with an ever-changing market – they just don’t have the time or the energy to concern themselves with digitally transforming a whole business. If Accenture’s purpose is digital transformation, then going after creative agencies is barking up the wrong tree.Is Accenture's push into the creative sector an identity crisis?

Worlds apart

Perhaps more importantly, these two industries are worlds apart in terms of the way they think. Creative agencies are all about ideas, campaigns and consumers. Digital businesses, on the other hand, are customer-driven – they think in terms such as lifetime value, measurement, and efficiency. Customer-led thinking is an entirely different beast to consumer-led thinking.

The reality is that the arrival of digital and an all-encompassing obsession with technology, measurement and social has led to the death of agencies in a reductive, zero-sum, efficiency-focused battle with brands. Indeed, agencies have become so obsessed with the latest tech fads, they’re beginning to forget how brands work. Worse still, they’re beginning to forget how brands are built. And, by forgetting, they’re destroying their own values.

Killing creativity

All things considered, it really feels to me as though Accenture is a chip leader in a game it doesn’t understand. Expensive acquisitions like these show that they’ve got the big money, but they don’t appear to have any idea what they’re doing with it. Take talent, for example. The best talent in the creative industry right now is out in the market; it’s not tied to any one agency. Both agencies might well be at the top of their game, but why would a consulting firm waste so much money on buying them when they could hire high-quality creative talent on a contingent basis instead?

As their presence in the top 10 creative agencies shows, there is a growing trend in which Accenture, like many of the other big players, are buying up agencies as if they were nothing more than keywords. What they’re really buying, though, is a collection of credentials, clients and IP. Unfortunately, the talent that created those credentials aren’t going to stay at the business, the clients that hired the agency in the first place won’t be interested in buying what is basically just another part of Accenture, and the IP never really existed to begin with.

Droga5, for example, was one of the few agencies that did great brand work the old-fashioned way – undoubtedly something that made it attractive to Accenture in the first place. The irony, though, is that by leading it further away from the way of working that made it so special, the consulting giant will kill its creativity.

“Accenture Interactive has been dazzled by its ambitions to become the CMO agency of record…. But, in flashing its cash, it is spending millions on acquiring nothing of any value.”

If pressed, the recently acquired agency staff at Accenture will tell you just how dysfunctional the new arrangement is. They’re largely unfulfilled. Rarely do they feel their work has any sort of meaning or purpose. What’s more, the different disciplines have found little or no common ground, and find it hard to work together as a cohesive whole. It’s not surprising, then, to see talented people leaving in droves.

Beyond the window dressing 

It’s clear, then, that consulting firms and creative agencies are no easy bedfellows. But in his company’s defence, Accenture Interactive’s Senior Managing Director for North America, Glen Hartman, described its culture as being “far, far away from what a stereotypical consulting firm would look like. Our office and studios look a lot like Droga5’s.”

In demonstrating a belief that office design equates to workplace culture, this statement serves as an illustration of how confused Accenture is right now. It wants to justify its new strategy so badly, it’s started dressing like a creative agency. But if you look beyond the window dressing and see that you and your partners are speaking a different language with a different purpose, selling to different people in a different market, there’s no getting away from the fact that you’re different.

Accenture Interactive has been dazzled by its ambitions to become the CMO agency of record, and it wants to dazzle others with its new direction. But, in flashing its cash, it is spending millions on acquiring nothing of any value.

Related: Space between consulting firms and creative agencies is converging.